States and localities have given retail juggernaut Amazon almost a quarter-billion dollars in economic development subsidies in the past two years for warehouses the company must buildto fulfill the rapid-delivery service tied to its Amazon Prime business model. The extent of the subsidies is actually likely greater, but poor disclosure practices in some states make it difficult to determine the full amount.
Some public officials have come to understand that business basics, not incentives, determine Amazon’s site location choices, and have started trying to say no. But others continue to award the company subsidy packages reaching even eight figures. The public interest would be best served if public officials said “no more deals, period” to Amazon.
Those are the key findings and recommendation of Will Amazon Fool Us Twice? Why State and Local Governments Should Stop Subsidizing the Online Giant’s Growing Distribution Network, a study released by Good Jobs First and available online at www.goodjobsfirst.org.
“First, Amazon avoided collecting sales taxes to aggressively gain market share. Then in some states it started parlaying nexus settlements, agreeing to collect sales taxes where it had a physical presence, into economic development subsidy packages worth more than $600 million. Now, incredibly, it is back for a third round of tax breaks for the facilities it must build for its same-day delivery service,” said study co-author Greg LeRoy, GJF’s executive director. “Some public officials have figured Amazon out. Now it’s time for all of them to say no more deals.”
With a distribution network that has grown to locations in across about half the states, and a business model that requires it to deliver some goods the same day they are ordered, Amazon is on a rapid build-out trajectory. Despite its well-known imperative to build out, some state and local governments have continued to give Amazon seven- and eight-figure subsidy packages
The study was funded by the Surdna Foundation. The findings and recommendations are solely those of Good Jobs First. Good Jobs First is a non-profit, non-partisan resource center promoting accountability in economic development. Founded in 1998, it is based in Washington DC.
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